Investor Offering
- A total of USD [70] million is planned to re-enter KE-1 and drill KE-South
- KE-1 re-entry funding round to be completed in 3Q2014
- KE-South appraisal well funding requirement to be in place by 2Q2014
- Production from KE-1 in 2014
- MakMera will receive 82% of oil output proceeds until well related capex and opex have been recovered, 40% of proceeds thereafter
- Partnership with indigenous partner provides oil profit tax exemption of 3 to potentially 5 years
Nigeria overview
Nigeria has a positive investment climate for oil investors:
- Low geological risk
- Low acquisition costs per barrel
- Open access to world oil markets via offshore terminals
- Stable fiscal regime for oil industry
- British Common law and English language widely spoken
- Limited government interference
- High quality light crude sold at a premium to Brent
- Open business environment for acquiring oil and gas licenses
- Low natural disaster risk
Opportunity pipeline in Nigeria
MMU will develop KE South after a successful appraisal by its first well. That could mean 1-2 additional wells, draining some of the 13 multiple stacked reservoir sands.
MMU will appraise the other – undrilled - KE prospects: North and North east
- Affiliate companies have equity stakes in 3 exploration blocks.
* Represents potential deal flow for MakMera Upstream - MMU will bid for Marginal Fields in the new license round (2014), either alone or via a farm-in
- MMU will bid to farm-in to a fitting consortium for present and future IOC divestments in the Delta
Unique Selling Points in Nigeria
A Unique competitive edge in Nigeria over many other domestic and international oil companies
- President/COO's Nigerian experience from Addax Petroleum and Afren Petroleum
- Current Nigeria presence and know how
- Team has in-country working experience
- Extensive local network among Nigerian business leaders and politicians
- Immediate access to attractive oil and gas opportunities
- Non-threatening, proactive partner to indigenous oil companies
Nigeria – country risk
Nigerian country risk has traditionally been associated with social-economic issues:
- Legal/enforcement risk
- Communities
- Corruption
- Expropriation
Nigeria – risk mitigation of legal system
Nigeria offers investors a relatively stable legal system
- Nigeria has a well developed commercial law stemming from English law
- MOU’s and Agreements for the oil industry are mainly written under English law
- Nigeria has an independent judiciary
- Legal certainty for commercial contracts are seen as paramount to encourage investment in the country and particularly the oil and gas sector.
- Most contracts have international arbitration provisions which are enforceable under Nigerian law
- International law firms are widely used
- License awards and contractual documents have historically been respected by the Government in accordance with their terms
Nigeria – other risk mitigation
Several mechanisms are in place to mitigate other risks
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Communities
- The relationship with communities is crucial, Our 60% indigenous partner manages relationship with the host communities where the principals hail from.
- Long term engagement programs have proven to be successful. Creating a win-win situation, addressing poverty and unemployment in the rural areas have started to take positive effects. Sabotage and other hostilities is sharply down since visible indigenisation is taking place. Corruption
- The Economic and Financial Crimes commission (EFCC) was set up in 2002 to remove corruption. The EFCC has a strong reputation for effectively fighting corruption/crime. The current president of Nigeria has a strong anti-corruption campaign.
- Upstream operators successfully do business without bribing authorities. Expropriation
- Historically assets have never been seized.
- All crude is for export, there is virtually no local market
- Dollar accounting mitigates foreign currency exchange restrictions